Overcoming obstacles


The Moscow government facilitates the life of developers in construction sector.

Is it difficult to build in Moscow? How much time is spent on approvals of necessary documentation, how the town-planning activities regulation system is changing in Russia and in Moscow in particular? These and other questions were discussed by the participants of the roundtable in the format of UrbanTalks, held as a part of the Moscow Urban Forum.

The discussion was attended by representatives of the Ministry of Construction, Housing and Utilities of Russia, the Moscow City Department of urban planning policy, the Agency for Strategic Initiatives, the National Association of Property Developers, as well as representatives of business and industry organizations.

As noted by the participants, the system of urban development regulations in Russia is being actively reformed. The impressive results have achieved in a short period of time. Thus, according to World Bank estimates, “Building Quality Control Index” of Russia in 2015 amounted to 14 points out of 15. From 2010 to 2015, Russia has risen in the ranking of the World Bank in terms of “Dealing with Construction Permits” by 60 positions – from 179th to 119th.

Helping business

According to participants of the roundtable discussion, business facing up current crisis feels the need of the reduction of administrative barriers along with the reduction of financial charges for administrative procedures.

Natalia Antipina, State Secretary, Deputy Minister of Construction, Housing and Utilities of Russia, has recalled that before the reform aimed at reduction of administrative barriers in construction sector developers have to spend 423 days for necessary procedures. According to World Bank data, now the timeline of all approvals amounts to 263 days, and Moscow has the best performance in Russia. 12 procedures have already been transferred to electronic format. However, the Moscow city government together with the Ministry of Construction is setting the target to shorten terms for approvals up to 130 days.

The start of innovations in the capital was given in 2012 when the Mayor of Moscow Sergey Sobyanin called lowering of administrative barriers one of the main tasks of the city to create a comfortable investment climate.

Figures from the ranking DoingBusiness of the World Bank (WB) is used as one of the important indicators of the implementation of the program on reduction of administrative barriers. This ranking is based on an anonymous survey of housebuilders and developers in 189 countries; it reflects the extent of ease of doing business including the construction sector.

According to the World Bank (including all methodological conventions), in 2010 a housebuilder in Moscow spent 589 days on administrative procedures and 4.2% of the total cost of a construction project, in 2016 these figures amounts to 244 days and 1.7% respectively, so the costs are down by almost 2.5 times. The total number of procedures reduced from 48 to 19.The Department of urban planning policy of Moscow has developed a new set of measures under the provisional name “9 Steps From Project To Object”. It is aimed at the construction of low-risk facilities, i.e. facilities constructed on the basis of simplified supervision according to the Town Planning Code of the Russian Federation. The terms for approvals and costs on such facilities will be significantly reduced: up to 99 days and 0.9% of the project cost.

Two trends

According to Sergey Sivaev, Senior Director of the Federal Center for Project Finance (Vnesheconombank group), professor of the Higher School of Urban Studies of the HSE, in consequence of the reforms, two main positive trends have outlined in the urban development field of Moscow – total reduction of procedures of conciliation and transfer of a number of procedures to electronic format, which saves time and money.

The Head of Moscow Department of urban planning policy Sergey Levkin told about the Moscow program of facilitation procedures, reduction of costs and conversion of state services to e-format. He stressed that the approach should be carefully elaborated, because it’s impossible to amend the legislation and change the rules of the game on and on. Moreover, setting a task to reduce administrative burden on business it is necessary to consider another aspect – safety of the construction for the capital itself.

The total number of projects under construction in Moscow now exceeds 2.5 thousand, the total area of construction sites amounts to more than 20 million square meters. “Regulation should be facilitated as much as practical but on the other hand we should keep in mind that not all administrative barriers appear to be obstacles,” stressed the Head of the Department of urban planning policy of Moscow.

He also noted that Moscow has the strongest stand in Russia in terms of conversion of state services to electronic format. 73% of all applications for state services in the construction sector of Moscow have been performed via the portal of state services. A few more services will be transferred in e-format this year.

In particular, the work on transferring materials and engineering surveys of Geofund in electronic format is ongoing in Moscow. Its incorporation in the global federal system will allow seeing a comprehensive picture of the utilities on a construction site online. “So we want to combine three steps performed by investor in one service: the development plan of a land plot (GPZU), preliminary technical specifications and Consolidated Plan – to combine into a single service,” explained Sergey Levkin. According to him the application will be submitted to only one governmental agency, which is in charge to collect information in electronic format and provide investors with full understanding of what they need to implement his project.

The Head of the Department of urban planning policy of Moscow also said that during the last two years the Moscow government tackles the problem concerning urban utility systems. This field is quite developed at the federal level, a number of laws have adopted, but the process of filing in the application for technological connection to utility systems is rather confusing, moreover the conditions are constantly changing. The Moscow authorities together with the Club of Investors formed a definite position on the issue, which will be accepted in the road map aimed at regulation of this procedure. Moscow has already taken steps in this direction – the portal of state services provides online service of submitting applications for connection to electric networks (since February 1) and obtaining technical specifications for a contract for connection to the water supply and sewerage networks (since March 1).

“We’ve set a target to finish the work on the Consolidated plan of underground utility systems and structures before the end of 2016. It will contain unified information about the types and spatial arrangement of existing and planned underground utilities and structures. The developer needs to know not only what is situated under the ground, but also what will soon be implemented,” said Sergey Levkin. He also noted that the world has very few examples of such resources, only the Netherlands, Switzerland and Germany have similar tools for investors.

Another problem to be solved at the moment is optimization of interdepartmental electronic interaction. Given the large amount of incoming applications for construction projects, there are nuances that require consideration at the interdepartmental level. The work on these issues is ongoing, said Levkin, it is carried out by the state services committee, the Government Office and the Department of Information Technologies.

Moreover the Moscow government decided to establish an integrated contact center. The essence of this revolutionary initiative consists in collecting in one place all necessary information for developers. It can be used by developers, governmental agencies and experts. Developers will be able to apply directly to the authorities in charge of this or that service, to solve certain issues. Using an online calculator of procedures by setting specific parameters of an object, it is possible to obtain information about the sequence of actions, deadlines and possible failures in case of providing incorrect information.

Drawing conclusions the Head of the Moscow department of urban planning policy noted that collaborative effort taken together with the Ministry of Construction, the Ministry of Economic Development, and the Agency for Strategic Initiatives and the Government of St. Petersburg has allowed Moscow boosting up from 179th to 56th position, according to the rating of the World Bank in 2015. “We have improved our positions by 2.5 times in terms of procedures, in terms of days we lifted up by 1.7 times, in terms of cost – by 2 times. Out of 40 necessary procedures now only 19 is left, and its further reduction requires considerable effort,” he noted. The main concern for Moscow is to reduce the list up to 11 procedures.

In the meantime the participants of the discussion noted that nationwide process of reduction of administrative barriers in the field of urban development is not so smooth. Regulations and procedures vary from region to region, terms for obtaining permits differ tenfold and even more, told Dmitry Volkov, the public official of the Agency for Strategic Initiatives in Moscow. The solution may involve a unification of procedures for the regions. Of course, in times of crisis it is unlikely to do fast, noted the meeting participants. But positive experience of Moscow and St. Petersburg is already gained, the rest can determine whether to follow the pattern.